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Corporate globalization and bank lending

Author

Listed:
  • Shujing Li

    (China Securities Regulatory Commission, Beijing, China)

  • Jiaping Qiu

    (DeGroote School of Business, McMaster University, Hamilton, Ontario, Canada)

  • Chi Wan

    (Department of Economics, Carleton University, Ottawa, Ontario, Canada)

Abstract

This paper investigates the effect of corporate globalization on bank loan contracts, as reflected in both price and non-price loan terms. We show that globally diversified firms receive more favorable valuation from creditors than domestic firms do. Specifically, we find strong evidence that global firms are charged lower loan rates, and are spared the more restrictive non-price contractual terms such as short maturity and collateral requirements. Our results are robust to various extensions, including controlling for firms’ endogenous choice of globalization, recognizing the joint determination of loan terms, and using alternative measures of global diversification. Our study contributes to the international business literature as the first comprehensive investigation of how global diversification affects bank lending.

Suggested Citation

  • Shujing Li & Jiaping Qiu & Chi Wan, 2011. "Corporate globalization and bank lending," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 42(8), pages 1016-1042, October.
  • Handle: RePEc:pal:jintbs:v:42:y:2011:i:8:p:1016-1042
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    Cited by:

    1. Zhang, Sufang & He, Yongxiu, 2013. "Analysis on the development and policy of solar PV power in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 21(C), pages 393-401.
    2. Najah Attig & Narjess Boubakri & Sadok El Ghoul & Omrane Guedhami, 2016. "Firm Internationalization and Corporate Social Responsibility," Journal of Business Ethics, Springer, vol. 134(2), pages 171-197, March.
    3. Ge, Wenxia & Kim, Jeong-Bon & Li, Tiemei & Li, Yutao, 2016. "Offshore operations and bank loan contracting: Evidence from firms that set up subsidiaries in offshore financial centers," Journal of Corporate Finance, Elsevier, vol. 37(C), pages 335-355.
    4. Munier, Nathan, 2016. "“The one who controls the diamond wears the crown! The politicization of the Kimberley Process in Zimbabwe”," Resources Policy, Elsevier, vol. 47(C), pages 171-177.
    5. repec:kap:jbuset:v:150:y:2018:i:2:d:10.1007_s10551-016-3140-8 is not listed on IDEAS
    6. Lin, Zhijun & Song, Byron Y. & Tian, Zhimin, 2016. "Does director-level reputation matter? Evidence from bank loan contracting," Journal of Banking & Finance, Elsevier, vol. 70(C), pages 160-176.
    7. Mohammad M Rahaman, 2016. "Chinese import competition and the provisions for external debt financing in the US," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 47(8), pages 898-928, October.
    8. repec:eee:empfin:v:45:y:2018:i:c:p:157-180 is not listed on IDEAS

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